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Gasoline price falls below $2 here

Sun Staff

Consumers are finally getting a breather from the soaring cost of gas.

For the first time in a month, the national average price of gasoline fell to less than $2 a gallon, according to two separate surveys. And the Lundberg Survey reported that the average for all grades fell for the first time this year.

But motorists shouldn't count on too much more relief during the vacation season. Prices - which fell partly in response to expected higher output from the Organization of Petroleum Exporting Countries - won't drop much further for the rest of the summer, experts said.

"The good news is we're down about a nickel since the first of June, and hopefully we're stabilizing a bit for the summer," said John White, manager of government relations for AAA Mid-Atlantic. But, he warned, "It's probably not likely that gas prices will keep falling. ... We probably won't see a significant fall in prices until after Labor Day when we stop driving so much."

The Department of Energy reported yesterday that the average price of regular gasoline broke below the barrier of $2 per gallon for the first time since May 17 to $1.985 a gallon, marking the third weekly decline in price.

AAA's daily Fuel Gauge Report showed a slightly higher average at $1.994 per gallon, the first under $2 since May 18.

The biweekly Lundberg Survey showed the weighted national average price for all three grades of gasoline falling 6.5 cents to $2.04 Friday, after rising more than 59 cents since mid-December.

In Maryland, prices below $2 have become more common, though AAA reported yesterday that the average price of regular was $2.02. Prices often vary by region because of demand and how gasoline is supplied, said Paul Fiore, director of government affairs for the Washington, Maryland, Delaware Service Station and Automotive Repair Association.

The drop at the pumps reflects increased gasoline supplies in the U.S. markets in recent weeks, both from imports and increased domestic production, said Jacob Bournazian, economist with the Energy Department's Energy Information Administration.

Also, wholesale prices have dropped by about 20 cents to 25 cents a gallon since peaking in the middle of May, he said.

"Retail prices are falling," Bournazian said. "We will see them continue to fall, but very gradually during the summer because we're in a high demand period."

He predicted pump prices would fall another 15 cents over the next eight to 10 weeks, then even further once demand drops off in September.

Despite record high demand for gasoline during the spring, "the market has shown the ability to meet demand with increased imports and higher production," he said.

Drop in crude price

Wholesale prices have been pushed down by a decline in crude oil prices, which have fallen from highs of more than $40 per barrel in recent weeks.

Oil prices fell to their lowest levels in more than a month last week, with the July contract for light sweet crude slipping below $37 per barrel on the New York Mercantile Exchange for the first time since the end of April. World oil prices have eased after OPEC announced this month that it would increase production this summer to help stabilize prices.

All of that is good news for consumers, as well as for service-station dealers, who say their profit margins have been squeezed by the higher prices as volume drops off.

Mike Kolasinski, a dealer who runs the White Marsh Shell on Pulaski Highway, has been able to lower the price of regular gasoline from a high of $2.07 per gallon on June 3 to $1.97 per gallon as his costs have come down. Yesterday, he was offering a promotion of $1.93 per gallon.

"It's not a benefit when prices go up for dealers," said Kolasinski. "I'm in a very, very competitive area. These super-conglomerates like Sheetz and Wawa and Royal Farms, they can give their gas away to get people in the store. If you price too high, you're not going to pump any gas.

"It's hard to compete," he said. "The dealers are not making any more money" with higher prices.

Besides facing fiercer competition, dealers have to pay higher credit card processing fees as prices rise, said Fiore, of the dealers association.

"At $2 a gallon, we're paying twice what we did at $1 a gallon," he said. "Any time prices go down, it's a relief. We're glad consumers are getting a little bit of a break, but from our perspective we have a long way to go."

Yesterday, the six pumps were all in use at the CITGO at 33rd Street and Greenmount Avenue, where regular gas cost $1.97 per gallon.

Ann Lee, who has owned the station since 1987, said she was relieved to be able to drop prices even a couple of pennies, from $1.99 per gallon Saturday to $1.97 per gallon yesterday. Already, her business was up by about 10 percent, she said.

"They can get more gas," she said of her customers. "When you put the price high, they're scared to fill up their tanks. Right now more people are filling up."

'We took Iraq'

One of them was Chris Chrisakis of Parkville, who stopped at the CITGO because the prices were lower than the $2.05 he's seen elsewhere in the city. He's hoping prices will drop to the $1.80-per-gallon level.

"We took Iraq over but the gas still stays the same," he said. "It makes no sense."

High gas prices have been stressful, said Cindy Camp, an off-duty police officer.

"It's really frustrating when you have a lot to do ... so I try to stay in one area to do things," she said.

Now, she says, she appreciates drops in gas prices - even if it's just by a few cents.

But Cynthia Dorsey, filling the tank of her 2000 Mercury Mountaineer, was less impressed.

"I drive an SUV," she said. "My opinion is it's not going down fast enough."

Sun staff writer Tamara El-Khoury contributed to this article.

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